Migration campaigners today voiced concern after Home Secretary David Blunkett said there was "no obvious limit" to the number of immigrants who could settle in the UK.

Mr Blunkett used a speech last night to promote the economic benefits of legal migrants, who generate 10% of Britain's GDP even though they make up only 8% of its population.

Later he also said that the current net inflow of around 170,000 migrants a year was "permanently sustainable" so long as it was managed to ensure that incomers were ready to work legally, rather than claim benefits or enter the black economy.

Mr Blunkett warned that without legal migration, "growth would stall, economic flexibility and productivity would reduce". Already, Scotland's economy was suffering from a shortage of workers, while in London sectors like hospitality and catering could not function without migrants.

Asked if there was an upper limit on the number of migrants, he said: "No, I see no obvious limit. I see a balance in terms of the different forms of entry, migration and residency in this country so that we can get it right."

Mr Blunkett accepted that in some parts of the country, local people felt swamped or overwhelmed by new arrivals.

But he declined to say how many people he thought Britain could comfortably hold, insisting that it had always been "a crowded, vigorous island".

Sir Andrew Green, of pressure group MigrationWatch UK, said: "For him to say there is no upper limit is absolutely astonishing.

"We have no problem with moderate and managed migration. The problem is that it is neither moderate nor managed."

Home Office figures showed net migration into the UK of 172,000 people last year, not including those who evaded official attention, he said.

"What we are looking at over a period of 10 years is at least two million additional population in Britain," said Sir Andrew.

"Seventy-five per cent of those go to London, so there is a huge impact on public services in London.

"England is nearly twice as crowded as Germany, four times as crowded as France, 12 times as crowded as the US. I can't think what they are doing."

Shadow home secretary David Davis said: "It is clearly right to recognise the valuable contribution legal migration makes to the UK economy.

"However, there is widespread concern that the Government have expanded the scope of legal migration as a way to cover up their failure to tackle widespread abuse of the asylum system.

"David Blunkett has to recognise that Britain is a small and crowded island.

"Any changes to our immigration policy can only take place after a sensible, rational debate about the economic, social and environmental consequences - not simply because the Government has failed to get to grips with illegal immigration."